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costs budgeting

Defective costs budgets

By on Oct 29, 2018 | 1 comment

The decision of Mr Justice Walker in Page v RGC Restaurants Ltd [2018] EWHC 2688 (QB) provides further important guidance on the costs budgeting process and is essential reading for those involved in costs budgeting. The underlying case was subject to costs budgeting.  The parties decided between themselves, without consulting the Court, that the budgets could be prepared on the basis that it was too soon to budget for trial preparation and trial costs.  The Claimant’s budget therefore included nothing for these phases. The main rule in issue was CPR 3.14: “Unless the court otherwise orders, any party which fails to file a budget despite being required to do so will be treated as having filed a budget comprising only the applicable court fees.” At the CCMC, the master concluded that the failure to serve a budget that included trial preparation and trial estimates amounted to a failure to file a budget that complied with the rules.  He decided that the consequence of this was that the CPR 3.14 sanction applied and made a costs management order limiting the Claimant’s budget accordingly (ie court fees only). On appeal, the master’s decision that there had been a failure to file a compliant budget was upheld.  However, the appeal judge ruled that the master should have gone on to consider whether to disapply the sanction (even in the absence of an application for relief from sanctions) as CPR 3.14 specially provides that the sanction applies “unless the court otherwise orders”.  The judge then applied the Denton principles to the issue of whether the court should have otherwise ordered and did so to the extent that the sanction would not be applied to those phases of the budget that had been properly completed and agreed by the Defendant.  However, the sanction would continue to apply in relation to the trial preparation and trial phases.  Given the matter had been listed for a five day trial, this represents a very serious sanction and is likely to cause a major loss to the Claimant’s solicitors (or possibly professional indemnity insurers) if the matter proceeds to trial. The obvious lesson from this decision is that it is not for parties to decide not to file...

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